FUND ADMINISTRATION AGREEMENT
AGREEMENT dated as of June 1, 2003 between FRANKLIN MUTUAL RECOVERY
FUND, a Delaware statutory trust (the "Trust"), and FRANKLIN XXXXXXXXX SERVICES,
LLC (the "Administrator").
In consideration of the mutual agreements herein made, the parties
hereby agree as follows:
(1) The Administrator agrees, during the life of this Agreement, to
provide the following services to the Trust:
(a) providing office space, telephone, office equipment and
supplies for the Trust;
(b) providing trading desk facilities for the Trust, unless these
facilities are provided by the Trust's investment adviser;
(c) authorizing expenditures and approving bills for payment on
behalf of the Trust;
(d) supervising preparation of periodic reports to Shareholders,
notices of dividends, capital gains distributions and tax credits; and attending
to routine correspondence and other communications with individual Shareholders
when asked to do so by the Trust's shareholder servicing agent or other agents
of the Trust;
(e) coordinating the daily pricing of the Trust's investment
portfolio, including collecting quotations from pricing services engaged by the
Trust; providing fund accounting services, including preparing and supervising
publication of daily net asset value quotations, periodic earnings reports and
other financial data;
(f) monitoring relationships with organizations serving the
Trust, including custodians, transfer agents, public accounting firms, law
firms, printers and other third party service providers;
(g) supervising compliance by the Trust with recordkeeping
requirements under the federal securities laws, including the Investment Company
Act of 1940 (the "1940 Act"), and the rules and regulations thereunder,
supervising compliance with recordkeeping requirements imposed by state laws or
regulations, and maintaining books and records for the Trust (other than those
maintained by the custodian and transfer agent);
(h) preparing and filing of tax reports including the Trust's income
tax returns, and monitoring the Trust's compliance with subchapter M of the
Internal Revenue Code, and other applicable tax laws and regulations;
(i) monitoring the Trust's compliance with: 1940 Act and other
federal securities laws, and rules and regulations thereunder; state and foreign
laws and regulations applicable to the operation of investment companies; the
Trust's investment objectives, policies and restrictions; and the Code of Ethics
and other policies adopted by the Trust's Board of Trustees or ("Board") or by
the Adviser and applicable to the Trust;
(j) providing executive, clerical and secretarial personnel needed to
carry out the above responsibilities; and
(k) preparing regulatory reports, including without limitation NSARs,
proxy statements and U.S. and foreign ownership reports.
Nothing in this Agreement shall obligate the Trust to pay any compensation to
the officers of the Trust. Nothing in this Agreement shall obligate the
Administrator to pay for the services of third parties, including attorneys,
auditors, printers, pricing services or others, engaged directly by the Trust to
perform services on behalf of the Trust.
(2) The Trust agrees to pay to the Administrator as compensation for such
services a monthly fee equal on an annual basis to 0.20% of the average daily
net assets of the Trust.
From time to time, the Administrator may waive all or a portion of its fees
provided for hereunder and such waiver shall be treated as a reduction in the
purchase price of its services. The Administrator shall be contractually bound
hereunder by the terms of any publicly announced waiver of its fee, or any
limitation of each affected Trust's expenses, as if such waiver or limitation
were fully set forth herein.
(3) This Agreement shall remain in full force and effect through for one
year after its execution and thereafter from year to year to the extent
continuance is approved annually by the Board of the Trust.
(4) This Agreement may be terminated by the Trust at any time on sixty
(60) days' written notice without payment of penalty, provided that such
termination by the Trust shall be directed or approved by the vote of a majority
of the Board of the Trust in office at the time or by the vote of a majority of
the outstanding voting securities of the Trust (as defined by the 1940 Act); and
shall automatically and immediately terminate in the event of its assignment (as
defined by the 1940 Act).
(5) In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Administrator, or of reckless disregard of its duties and
obligations hereunder, the Administrator shall not be subject to liability for
any act or omission in the course of, or connected with, rendering services
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers.
FRANKLIN MUTUAL RECOVERY FUND
By: /S/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Vice President & Secretary
FRANKLIN XXXXXXXXX SERVICES, LLC
By: /S/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Senior Vice President &
Secretary
